Revisiting absolute return funds: Once bitten, twice shy?

Absolute return funds

Fund managers need to reveal the source of their skill and be more explicit on how they add value, says James Clunie, manager of the Jupiter Absolute Return fund.

Mired by periods of mixed performance, the absolute return sector has come in for tough criticism in recent years. Many funds experienced sharp falls during the financial crisis of 2007/08, and negative returns during 2011. This was hardly what investors expected from a product group which universally aimed to deliver positive returns in all market conditions. While the numbers tell one story, a broader question the industry has attempted to address recently has been whether these funds have been marketed suitably. The ‘absolute return’ label in itself can invite a sense of commonality,...